The Global Assembly Industry: Maquiladoras in International Perspective

Patricia A. Wilson

Abstract

Mexico's assembly industry is a striking border phenomenon - the result of free trade in goods and capital but not labor between neighboring countries with huge differences in wage rates. Throughout its twenty-five year history the maquiladora industry has remained largely a border industry, using inputs from the U.S. and integrating very little with the Mexican economy. Yet in other parts of the globe, the foreign assembly industry has been a catalyst, a stepping stone, to further industrialization and higher wage rates in the host country. The newly industrializing countries of Asia (Korea, Taiwan, Hong Kong and Singapore) are prime examples. If the maquiladora industry begins to follow suit - as the Mexican government is encouraging - it will gradually lose its border identity and integrate with the interior.

This article argues that there is no natural, inexorable path to advanced industrialization based on the assembly industry. Rather, the reason why some countries have been able to develop on the basis of assembly industry and some have not has to do with public policy, the social and political context and the historical period. The following discussion of the rise of the global assembly industry addresses the conditions and factors that helped to create the success of some of the Asian countries, relegate the Caribbean to traditional assembly and put Mexico in a role somewhere between the two extremes. While some of the propitious conditions and factors could be replicated consciously in Mexico to take greater advantage of the assembly industry, there is no assurance that the assembly industry will automatically evolve into a more integrated industrial base. The article concludes with policy recommendations that are particularly relevant in light of the upcoming free trade agreement with the U.S.